Correlation Between Five Below and PETCO HEALTH
Can any of the company-specific risk be diversified away by investing in both Five Below and PETCO HEALTH at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Five Below and PETCO HEALTH into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Five Below and PETCO HEALTH CLA, you can compare the effects of market volatilities on Five Below and PETCO HEALTH and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Five Below with a short position of PETCO HEALTH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Five Below and PETCO HEALTH.
Diversification Opportunities for Five Below and PETCO HEALTH
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Five and PETCO is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Five Below and PETCO HEALTH CLA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PETCO HEALTH CLA and Five Below is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Five Below are associated (or correlated) with PETCO HEALTH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PETCO HEALTH CLA has no effect on the direction of Five Below i.e., Five Below and PETCO HEALTH go up and down completely randomly.
Pair Corralation between Five Below and PETCO HEALTH
Assuming the 90 days horizon Five Below is expected to generate 0.62 times more return on investment than PETCO HEALTH. However, Five Below is 1.63 times less risky than PETCO HEALTH. It trades about -0.16 of its potential returns per unit of risk. PETCO HEALTH CLA is currently generating about -0.15 per unit of risk. If you would invest 10,555 in Five Below on October 9, 2024 and sell it today you would lose (781.00) from holding Five Below or give up 7.4% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Five Below vs. PETCO HEALTH CLA
Performance |
| Timeline |
| Five Below |
| PETCO HEALTH CLA |
Five Below and PETCO HEALTH Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Five Below and PETCO HEALTH
The main advantage of trading using opposite Five Below and PETCO HEALTH positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Five Below position performs unexpectedly, PETCO HEALTH can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in PETCO HEALTH will offset losses from the drop in PETCO HEALTH's long position.| Five Below vs. BANK OF CHINA | Five Below vs. UmweltBank AG | Five Below vs. SOEDER SPORTFISKE AB | Five Below vs. Air Transport Services |
| PETCO HEALTH vs. AGNC INVESTMENT | PETCO HEALTH vs. MidCap Financial Investment | PETCO HEALTH vs. HK Electric Investments | PETCO HEALTH vs. Broadridge Financial Solutions |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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